Back in black, GMDC plans lignite expansion, entry into rare earths

Back in black for FY22, state-run Gujarat Mineral Development Corporation (GMDC) has chalked out growth plans by not just tapping deeper into its lignite mining business but also foraying into rare earth elements (REE) mining.

The mining company has roped in the Boston Consulting Group (BCG) for its strategic transformation, apart from McKinsey & Co. for the development of REE assets, said Roopwant Singh, IAS, Managing Director, GMDC.

"GMDC has delivered its best-ever annual results over the last five years and is the second-best in the company's entire life so far. Over the next few years, our focus will be to realise more and more world-class value-added products using the latest technologies & equipment. We have partnered with Boston Consulting Group (BCG) for strategic transformation; McKinsey & Co for the development of REE Assets; AT Kearney for the transformation of Thermal Power Project, and Deloitte to fast-track the six new lignite mining projects," said Singh.

Recently, GMDC announced its annual and quarterly financial results where the company registered a net profit of Rs 405 crore in financial year (FY) 2021-22 as against a net loss of Rs 35 crore in FY'21. Its total consolidated income grew by 93 per cent to Rs 2,889 crore for FY22, up from Rs 1,496 crore in the previous fiscal year 2020-21.

From progressively contracting in the last five years to a whopping 232 per cent jump in its lignite production for FY22 at its Bhavnagar mines to clock 1.64 million metric tonnes, up from 492,000 metric tonnes in FY21. In the month of March alone, GMDC's lignite production was 910,000 metric tonnes, the highest for March over the last four years.

"We have not only onboarded more customers and treated them well but also improved our pricing. Our long term customers have gone up to 600. We have prepared a roadmap for FY23 and beyond for which we have onboarded BCG to help take bigger strategic calls. We also plan to bring out some of our power projects which are currently in the red with the help of McKinsey & Co," Singh told Business Standard.

Without divulging further details, Singh also stated that the company was looking to foray into more value added products as well as long term mining opportunities such as REE for which GMDC is working on a strategy with its consulting partners.

"There has been a global shift in solid fuels. Hence, customers, especially SMEs fall back on known solid fuels like lignite which is half the price of imported coal. Currently, 86 per cent of our revenues comes from lignite which we are going to deepen in the coming years while developing new avenues," Singh said, while adding that the company had set a capital expenditure (capex) of Rs 670 crore for FY23 to execute its plans.

Meanwhile, the company is also working on six new mining projects, of which three are coming up in Kutch while rest in South Gujarat.